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AT&T was sued last week by a workers' union that is trying to stop the telco from instituting what it calls a "massive layoff." Thousands of employees are reportedly being laid off by the company, which reported $39.7 billion in revenue and $6.4 billion in operating income last quarter.

AT&T is "instituting an unprecedented massive layoff of employees represented by the union while at the same time massively subcontracting work that the employees are trained and qualified to perform," the Communications Workers of America (CWA) said in a lawsuit filed Saturday in US District Court in Austin, Texas. The union also filed a complaint with the National Labor Relations Board.

When contacted by Ars today, AT&T didn't deny the layoffs but said the union allegations that AT&T violated collective bargaining agreements are "baseless."

Further Reading

AT&T also defended its employment levels. In doing so, AT&T undercut some of its own previous arguments that net neutrality rules suppress investment and that AT&T needed a big tax cut in order to boost investment.

When AT&T lobbies for favors from the government, it offers a black-and-white description of network investment. If the government does what AT&T wants, AT&T will increase investment, and vice versa, AT&T's argument goes.

AT&T thus announced in November that it would invest "an additional $1 billion" if Congress passed a tax reform bill—but the telco never said what the exact level of investment would have been if the tax bill wasn't passed.

Similarly, when AT&T wanted the Federal Communications Commission to repeal its Title II net neutrality rules, AT&T CEO Randall Stephenson said that Title II regulation is "suppressive to investment."

AT&T got both the tax cut and the net neutrality repeal but then started laying employees off. AT&T's explanation of the layoffs demonstrates that the company's hiring practices are based on specific needs and changes in technology and are not direct responses to government actions.

"Despite its claim that a corporate tax cut would create thousands of middle-class jobs in its industry, AT&T recently announced that hundreds of workers in the Southwest would be declared 'surplus' and subject to layoff," CWA said in an announcement of its lawsuit.

AT&T’s defense of layoffs

Here's what an AT&T spokesperson told us today:

We're adding people in many parts of our business that are experiencing higher customer demand. At the same time, technology improvements are driving higher efficiencies and there are some areas where demand for our legacy services continues to decline, and we're adjusting our workforce in some of those areas.

We'll work to find other AT&T jobs for as many affected employees as possible. Regarding premises technicians, we adjust the workforce based on changing market dynamics, which vary from region to region. In some regions, we are hiring these same resources and these employees have the opportunity to transfer to those locations. It's important to note that we still have thousands more premises technicians than we did two years ago.

There are a few notable bits in there. When AT&T says it adds people in parts of its business that have growing customer demand and lowers staff in areas with less demand, it's acknowledging a simple business reality that is at odds with its claim that a tax cut will boost its investment by the specific amount of $1 billion. Hiring is intended to bring in more customers and revenue, and layoffs reduce spending to match a lower revenue opportunity; by AT&T's own admission, it hires employees to meet customer demand and reduces staff in areas with lessening demand even when it gets a tax cut that it claims will boost investment.

AT&T also argues that lower employment itself isn't a sign that AT&T isn't investing, because "technology improvements are driving higher efficiencies," allowing AT&T to do more with less.

That stance is hard to square with what AT&T said when it was arguing for a repeal of net neutrality rules. AT&T told the FCC then that "a reduction in relevant capital spending during the period immediately following adoption of the Title II Order" shows that the rules harmed investment. But since AT&T says that spending also declines when technology improvements drive higher efficiencies, there's no reason to conclude that any particular decline was caused by any particular government regulation.

Indeed, AT&T told the FCC in 2010 that capital investments are based on technology upgrade cycles and should not be expected to rise year after year. Capital investments are naturally "lumpy," rising and falling from one year to the next based on specific needs at specific times, AT&T said at the time.

The difference is that in 2010, AT&T was asking the FCC to declare that the wireless market is competitive, and it didn't want a slight decline in spending to be seen as a problem. In 2017, a slight decline in spending was touted by AT&T as a problem because it wanted the FCC to eliminate net neutrality rules.

Finally, AT&T's statement today said that "we still have thousands more premises technicians than we did two years ago." In other words, AT&T says that it greatly expanded its workforce during a two-year period when the Title II net neutrality rules were in place.

We asked the AT&T spokesperson to explain how the telco was able to boost its workforce despite the burden of net neutrality rules, and we're still waiting for an answer. But AT&T's statement that it has boosted staff under the Title II rules confirms what AT&T has occasionally admitted to investors—that the net neutrality rules did not hinder its business plans.

Similarly, Comcast recently claimed that it will invest more than $50 billion in infrastructure over the next five years because of the repeal of net neutrality rules and the new tax overhaul. However, Comcast's own data shows that the company's investments soared while the net neutrality rules were in place and would hit the "new" milestone if its investments continued increasing by a modest amount.

“Blatant act of bad faith”

Layoffs are reportedly happening nationwide and affecting thousands of jobs, but the CWA and AFL/CIO lawsuit against AT&T focuses on 713 layoffs in Texas, Oklahoma, Arkansas, Missouri, and Kansas.

"The alleged reason given by the Company for this extensive layoff, 'reduction in workload,' is palpably false," the union's complaint in US District Court says. "There is no reduction in workload. The Company's business is booming and earning massive profits."

AT&T is laying off employees and replacing them with subcontractors in order to weaken the union, the complaint says.

"In light of the fact that the work 713 employees perform is being performed by subcontractors, the true reason is bad faith diminution of the bargaining unit," the complaint says. AT&T refused to consider alternatives to layoffs, the complaint says.

The move "constitutes a blatant act of bad faith and breach of the promise of respectful and fair dealings set forth in the parties' Agreement," the union said. The complaint asks the court for an injunction requiring AT&T to reinstate the former employees to their positions and to provide them with lost earnings.

AT&T told Ars, "The fact is the allegations in the lawsuit are baseless. We comply with the terms of our collective bargaining agreements and did so in this case."

It was always the case that the "it will increase jobs and wages" argument was baseless. I don't know why anyone bought it. Corporations don't pay corporate taxes on wages since wages are part of COGS (Cost Of Goods Sold) and are thus deducted from total income as part of calculating operating income. What lowering corporate taxes does do is free up more money for dividends since dividends are paid out from taxed income. So, the argument that lowering corporate taxes was somehow going to free up money for increased employment and higher wages never made sense, but it was always easy to see how it would be a massive boon to the investor class (AKA donor class).

We are going to physically throw money at the routers, in the hopes they will go faster. This is our infrastructure investment plan. After the money has been thoroughly worn in by repeated collisions with the routers, it will be re purposed as CEO bonuses.

We are going to physically throw money at the routers, in the hopes they will go faster. This is our infrastructure investment plan. After the money has been thoroughly worn in by repeated collisions with the routers, it will be re purposed as CEO bonuses.

It was always the case that the "it will increase jobs and wages" argument was baseless. I don't know why anyone bought it. Corporations don't pay corporate taxes on wages since wages are part of COGS (Cost Of Goods Sold) and are thus deducted from total income as part of calculating operating income. What lowering corporate taxes does do is free up more money for dividends since dividends are paid out from taxed income. So, the argument that lowering corporate taxes was somehow going to free up money for increased employment and higher wages never made sense, but it was always easy to see how it would be a massive boon to the investor class (AKA donor class).

As much as I would like the blame AT&T for lying about everything (they probably are lying about most things), there's nothing wrong with them hiring a subcontractor if they're willing to do the same work for less money. So it's a shame that these people got laid off, but maybe they could get a job with the subcontractor then.

Perhaps it's the extra overhead of the union dues that are making it more expensive for the company to keep them on the payroll?

Actually, there's plenty of things wrong with it, if you're dumping people under a collective bargaining environment to hollow out your company and replace them with scabs contractors. The CWA needs to hold the line on this, or there will be no payroll employees left, and service will go to literal pieces.

Best of luck guys! I was never one of you, but was always on your side.

As much as I would like the blame AT&T for lying about everything (they probably are lying about most things), there's nothing wrong with them hiring a subcontractor if they're willing to do the same work for less money. So it's a shame that these people got laid off, but maybe they could get a job with the subcontractor then.

Perhaps it's the extra overhead of the union dues that are making it more expensive for the company to keep them on the payroll?

Ignoring the fact that these corporate tax cuts were sold on the basis that companies would raise wages? If that were true then the extra expense should have been covered more than amply by the tax cuts. If they needed to save why not cut the salaries of the C-levels that are likely making100x or more of the salary of these laid-off people? Strange how there’s always money in the budget for executive salaries and bonuses but workers are always evil and greedy for wanting slightly higher wages.

Not that I actually believed the BS being used to sell this reverse Robin Hood tax cut.

It was always the case that the "it will increase jobs and wages" argument was baseless. I don't know why anyone bought it. Corporations don't pay corporate taxes on wages since wages are part of COGS (Cost Of Goods Sold) and are thus deducted from total income as part of calculating operating income. What lowering corporate taxes does do is free up more money for dividends since dividends are paid out from taxed income. So, the argument that lowering corporate taxes was somehow going to free up money for increased employment and higher wages never made sense, but it was always easy to see how it would be a massive boon to the investor class (AKA donor class).

Dude, if you think congress was even bothering to listen to this tripe, you're living in the wrong reality.

That whole dog and pony act was for the drooling masses who believe in the GOP's economic fantasies, to keep them placated, and was just part one of the two-part propaganda they've been using since 1972.

First, dog and pony show.

Next, blame the (insert scapegoat of the day here) for when it detrimentally impacts the very people it was "supposed to help".

Wash, rinse, repeat.

The GOP is fucking evil.

[edit to add: Oh, and as for investments encouraging employment, that has never actually happened in pretty much any established company. Start-ups create new jobs with investments. For everyone else, investments take away jobs, by either sending them overseas (thanks to Reagan's cuts) or simply dropping them into the profit bin for the investors. Investing in more efficient systems doesn't create jobs, it makes jobs that were necessary because of that inefficiency go away. So the net result of investment in an established business is always layoffs. Historically, this is how it's been working for the last 45 years. Once upon a time, it may have been different. Not anymore.]

It was always the case that the "it will increase jobs and wages" argument was baseless. I don't know why anyone bought it. Corporations don't pay corporate taxes on wages since wages are part of COGS (Cost Of Goods Sold) and are thus deducted from total income as part of calculating operating income. What lowering corporate taxes does do is free up more money for dividends since dividends are paid out from taxed income. So, the argument that lowering corporate taxes was somehow going to free up money for increased employment and higher wages never made sense, but it was always easy to see how it would be a massive boon to the investor class (AKA donor class).

Dude, if you think congress was even bothering to listen to this tripe, you're living in the wrong reality.

That whole dog and pony act was for the drooling masses who believe in the GOP's economic fantasies, to keep them placated, and was just part one of the two-part propaganda they've been using since 1972.

First, dog and pony show.

Next, blame the (insert scapegoat of the day here) for when it detrimentally impacts the very people it was "supposed to help".

Wash, rinse, repeat.

The GOP is fucking evil.

Quote:

(insert scapegoat of the day here)

You say this like there is any doubt that they will blame Obama or Clinton.

As much as I would like the blame AT&T for lying about everything (they probably are lying about most things), there's nothing wrong with them hiring a subcontractor if they're willing to do the same work for less money. So it's a shame that these people got laid off, but maybe they could get a job with the subcontractor then.

Perhaps it's the extra overhead of the union dues that are making it more expensive for the company to keep them on the payroll?

Perhaps you don't have a fraking clue.

Subcontractors will pay a fraction of what AT&T does and the contract workers will likely have zero benefits. People don't work for these agencies because they want to, it's because (due to strong-armed tactics like these) they have no choice. AT&T, already massively profitable, becomes even moreso while they throw their workforce to the wolves.

It was always the case that the "it will increase jobs and wages" argument was baseless. I don't know why anyone bought it. Corporations don't pay corporate taxes on wages since wages are part of COGS (Cost Of Goods Sold) and are thus deducted from total income as part of calculating operating income. What lowering corporate taxes does do is free up more money for dividends since dividends are paid out from taxed income. So, the argument that lowering corporate taxes was somehow going to free up money for increased employment and higher wages never made sense, but it was always easy to see how it would be a massive boon to the investor class (AKA donor class).

Dude, if you think congress was even bothering to listen to this tripe, you're living in the wrong reality.

That whole dog and pony act was for the drooling masses who believe in the GOP's economic fantasies, to keep them placated, and was just part one of the two-part propaganda they've been using since 1972.

First, dog and pony show.

Next, blame the (insert scapegoat of the day here) for when it detrimentally impacts the very people it was "supposed to help".

Wash, rinse, repeat.

The GOP is fucking evil.

Quote:

(insert scapegoat of the day here)

You say this like there is any doubt that they will blame Obama or Clinton.

As much as I would like the blame AT&T for lying about everything (they probably are lying about most things), there's nothing wrong with them hiring a subcontractor if they're willing to do the same work for less money. So it's a shame that these people got laid off, but maybe they could get a job with the subcontractor then.

Perhaps it's the extra overhead of the union dues that are making it more expensive for the company to keep them on the payroll?

Actually, there's plenty of things wrong with it, if you're dumping people under a collective bargaining environment to hollow out your company and replace them with scabs contractors. The CWA needs to hold the line on this, or there will be no payroll employees left, and service will go to literal pieces.

Best of luck guys! I was never one of you, but was always on your side.

Despite being a union employee myself, I dislike the term scab because it's demeaning to the people referenced. And really, they're only 'scabs' if they're brought in during a strike to show the union that they're not necessary.

In my experience (admittedly short, and in a different, much more highly regulated industry), contractors do a uniformly good job at what we end up hiring them to do. Primarily we hire contractors to run hundreds of miles of conduit, using their dedicated crews to do what we simply do not have the manpower to do ourselves (at least, not without compromising our ability to perform other important services). We also work with contractors during initial construction, who perform the initial emplacement of transformers and other equipment, which we simply certify as being up to the established regulatory standards.

That is definitely not the case with telco contractors, who in my (again limited) experience as a customer, only really care about doing as many jobs in a day as they can, because they are often paid according to the number of tickets they resolve rather than by the hour. The work is often poor quality and requires multiple visits to completely resolve, and often ends up being done by a union serviceworker after the contractors have made multiple botched attempts to "fix" a problem.

I blame a lot of the problem on the poor regulations in the communications industry, since the companies aren't forced by the utility regulatory authorities to hold their networks to the same high standards as gas and electric distribution services, when they probably should be.

Actually, there's plenty of things wrong with it, if you're dumping people under a collective bargaining environment to hollow out your company and replace them with scabs contractors. The CWA needs to hold the line on this, or there will be no payroll employees left, and service will go to literal pieces.

Best of luck guys! I was never one of you, but was always on your side.

This is called "fissuring," and it does directly lead to lower wages, worse benefits, worse job security, and worse working conditions (including safety). Recommended reading: The Fissured Workplace by David Weil (former DOL WHD administrator under Obama). (I'm not linking to the Amazon page because their labor practices are also poor.)

Many of the laid-off works will probably find jobs with AT&T's contractors, though probably at significantly less pay. Many of these workers are within the demographics of those who voted Drumpf, so they will have no one else to blame but themselves. With some creative spin, immigrants, minorities, and foreigners will somehow end up as the scapegoats.

It was always the case that the "it will increase jobs and wages" argument was baseless. I don't know why anyone bought it. Corporations don't pay corporate taxes on wages since wages are part of COGS (Cost Of Goods Sold) and are thus deducted from total income as part of calculating operating income. What lowering corporate taxes does do is free up more money for dividends since dividends are paid out from taxed income. So, the argument that lowering corporate taxes was somehow going to free up money for increased employment and higher wages never made sense, but it was always easy to see how it would be a massive boon to the investor class (AKA donor class).

Dude, if you think congress was even bothering to listen to this tripe, you're living in the wrong reality.

That whole dog and pony act was for the drooling masses who believe in the GOP's economic fantasies, to keep them placated, and was just part one of the two-part propaganda they've been using since 1972.

First, dog and pony show.

Next, blame the (insert scapegoat of the day here) for when it detrimentally impacts the very people it was "supposed to help".

Wash, rinse, repeat.

The GOP is fucking evil.

Quote:

(insert scapegoat of the day here)

You say this like there is any doubt that they will blame Obama or Clinton.

Can anyone honestly say they were surprised by this? Anyone? (crickets)

Unfortunately there is a large bloc of voters that actually still believe the trickle-down lie and vote against their own best interests. It’s mind boggling for sure. Just look at the Carrier workers who believed Trump’s lie about saving their jobs...

But, but, the jobs. And the incomes. And the trickle on, I mean trickle down benefits.

I feel like telecos (well, and most other large businesses) just aren't even hiding the "we own the government" contempt that they show for everyone else these days.

Ya but considering the voting patterns of that same demographic, don't you have just as much contempt for them?

If it ONLY impacted the drooling masses who vote for the GOP, I'd say fuck them, they got what they voted for. I figure, those dogs like to be kicked because then they get to blame people they don't like, even if those people had nothing to do with it.

That's how they've been acting pretty much forever.

It's the others who could foresee the outcomes of these votes, tried to vote against it, and were still steamrolled by those outcomes who, in my book, are worthy of empathy and support.

I don't have much sympathy for masochists, and none at all for sadists.

As much as I would like the blame AT&T for lying about everything (they probably are lying about most things), there's nothing wrong with them hiring a subcontractor if they're willing to do the same work for less money. So it's a shame that these people got laid off, but maybe they could get a job with the subcontractor then.

Perhaps it's the extra overhead of the union dues that are making it more expensive for the company to keep them on the payroll?

Perhaps you don't have a fraking clue.

Subcontractors will pay a fraction of what AT&T does and the contract workers will likely have zero benefits. People don't work for these agencies because they want to, it's because (due to strong-armed tactics like these) they have no choice. AT&T, already massively profitable, becomes even moreso while they throw their workforce to the wolves.

Exactly. I never understood the logic of how a certain company I did work for as a contractor, who cleaned out their data centers, outsourced their entire staff that maintains them. They hired the same people back under them.

This data center, IIRC, makes millions of dollars, every minute. To turn around and say we need to scale back and hire a sub contractor instead of in house, is just bull shit. The whole "its more efficient because we don't have to do all the management" is also BS at the level they are at.

As much as I would like the blame AT&T for lying about everything (they probably are lying about most things), there's nothing wrong with them hiring a subcontractor if they're willing to do the same work for less money. So it's a shame that these people got laid off, but maybe they could get a job with the subcontractor then.

Perhaps it's the extra overhead of the union dues that are making it more expensive for the company to keep them on the payroll?

They're not just being accused of being dicks and going with a cheaper option, though. They're being accused of:

- Falsely claiming that they're doing this due to a reduction in workload, when the workload still exists and has simply been assigned to subcontractors.

- Issuing warning of the mass layoffs on such extremely short notice that it was impossible for the union to engage in any form of negotiations with the company.

- Refusing to delay the layoffs so that negotiations could take place.

The union claims that their agreement with AT&T requires that both parties engage in bargaining over this kind of thing in good faith, and the things AT&T is being accused of pretty plainly violate that. The specific claim they're making is breach of contract, and assuming that their agreement really does require AT&T to act in good faith in this area (I don't know anything about contract law so I really have no idea if that's the case) it's pretty clear that the company's in the wrong. Even if it doesn't and setting aside the specific legal complaints, what they're doing here is a lot worse than just going for cheaper labor.

I don’t see how this has anything at all to do with net neutrality. It’s clear you’re trying to make the story about that and have done so with weird links that frankly don’t make any sense at all.

AT&T never claimed Title II would send them bankrupt - the claim was that they would be successful either way but *more* successful if there are less regulations to block their more monopolistic business practices.

I hope you’re going to write another article that actually covers the issue at hand - are employees being replaced by contractors? That would be an interesting read.

The ISPs always (and by always, I mean ALWAYS) argued that Net Neutrality regulations prevented them from innovating and creating all those sweet, sweet high-paying jobs. And now that Ajit gave them 100% of what they wanted, they go ahead and lay off a ton of people.

If you don't see the link it is because you're deliberately not looking.